Intentionally Driving into Pedestrians Disqualifies Driver from Liability Coverage and Pedestrians from Uninsured Motorists Coverage

AUTO – UM – INTENTIONAL ACT – "UNINSURED MOTOR VEHICLE" – STAY OF ARBITRATION
Matter of Travelers Indem. Co. v. Richards-Campbell
(2nd Dept., decided 5/18/2010)

Jamille Andrews intentionally drove Cheryl Holt's car into Shekenah, Shadrach and Shekeila Campbell, injuring them.  Andrews subsequently was charged criminally and pleaded guilty to three counts of assault in the second degree arising from the incident, admitting that she had  intentionally struck the Campbells.

The Campbells made third-party BI claims to Holt's auto insurer, Lincoln General, which denied liability coverage based on Andrews' intentional act.  The Campbells then filed uninsured motorists (UM) coverage claims with their mother's auto insurer, Travelers, which similarly denied UM coverage because their injuries were caused by Andrews' intentional criminal acts rather than an accident and because the Holt vehicle did not constitute an "uninsured motor vehicle" within the meaning of their mother's auto policy.  The Campbells demanded arbitration of their UM claim and Travelers commenced this special proceeding for a permanent stay of that arbitration.

In REVERSING the Orange County Supreme Court's order that had denied and dismissed Traveler's petition, the Appellate Division, Second Department, held:

The Supreme Court correctly determined that Lincoln was not obligated to provide coverage under its automobile insurance liability policy, given that the Campbells' injuries were not the result of an accident, but rather, of an intentional criminal act by Andrews (see Matter of American Mfrs. Mut. Ins. Co. v Burke, 63 AD3d 732, 733; State Farm Mut. Auto. Ins. Co. v Langan, 55 AD3d 281, 283; Met Life Auto & Home v Kalendarev, 54 AD3d 830, 831; State Farm Mut. Auto. Ins. Co. v Langan, 18 AD3d 860, 862). However, the Supreme Court improperly determined, in effect, that Travelers was obligated to provide uninsured motorist benefits under its policy with the Campbells (see McCarthy v Motor Veh. Acc. Indem. Corp., 16 AD2d 35, 42, affd no opn 12 NY2d 922). 

The record reveals that Travelers properly disclaimed the Campbells' claim for uninsured motorist benefits under the subject insurance policy by establishing that their bodily injuries were caused by Andrews's intentional criminal acts (see Matter of American Mfrs. Mut. Ins. Co. v Burke, 63 AD3d at 733; Westchester Med. Ctr. v Travelers Prop. Cas. Ins. Co., 309 AD2d 927, 928; Matter of Progressive Northwestern Ins. Co. v Van Dina, 282 AD2d 680; Matter of Aetna Cas. & Sur. Co. v Perry, 220 AD2d 497), and that the offending vehicle was not an "uninsured motor vehicle" within the terms of the policy (McCarthy v Motor Veh. Acc. Indem. Corp., 16 AD2d at 46). Accordingly, the Supreme Court should have upheld Travelers' disclaimer and granted that branch of the petition which was to permanently stay arbitration. 

Note that Lincoln General's denial of liability coverage to Andrews did not render the Holt vehicle "uninsured" for purposes of a UM claim. See, McCarthy v. Motor Vehicle Acc. Ind., 16 AD2d 35 (4th Dept. 1962).

New York Vehicle with $25K/$50K Limits Deemed Uninsured in Comparison to North Carolina Mandatory Minimum Limits of $30K/$60K

UM/SUM – AUTO – NORTH CAROLINA POLICY
Matter of State Farm Mut. Auto. Ins. Co. v. Gray
(2nd Dept., decided 12/15/2009)

State Farm insured the respondent's vehicle under a North Carolina personal auto policy with $100,000 per person/$300,000 per accident bodily injury liability limits.  The respondent was injured in an auto accident that occurred in New York; AIG National Insurance Company insured the tortfeasor's vehicle under a New York personal auto policy with $25,000/$50,000 BI liability coverage limits.

With State Farm's consent, the respondent settled her personal injury claim against the tortfeasor for the per person BI coverage limit of $25,000.  State Farm subsequently advised its insured that since her policy contained only uninsured but not underinsured motorist coverage, it was closing its file because there was no further claim to adjust. Thereafter, Gray made a demand to arbitrate her claim for uninsured/underinsured motorist benefits under her North Carolina policy, and State Farm commenced this special proceeding to permanently stay the arbitration. Supreme Nassau granted the petition and permanently stayed the arbitration.

In REVERSING the order, denying State Farm's petition and dismissing the proceeding, the Appellate Division, Second Department, held:

• the uninsured motorist provision of State Farm's policy defined an uninsured motor vehicle as one to which a "policy applies at the time of the accident; provided its limit for liability is less than the minimum limit specified by the financial responsibility law of North Carolina"; the minimum limits in North Carolina are $30,000 per person/$60,000 per occurrence;  in this case, since the tortfeasor's policy limit of $25,000 per person/$50,000 per accident "is less than the minimum limit specified by the financial responsibility law of North Carolina [emphasis added]," the tortfeasor's vehicle was deemed to be uninsured under the language of the uninsured motorist provision of State Farm's policy issued to the respondent's husband;  and

• because State Farm's documents submitted in support of its petition failed to failed to demonstrate that the named insured had been offered but rejected underinsured motorists coverage in writing on a prescribed form as required by North Carolina law, the Grays' policy was deemed to include underinsured motorist coverage.